'Bang-up year' for M&A in Illinois

(Crain's) -- Mergers and acquisitions involving Illinois companies are occurring at a pace not seen in the past five years.

"It's been a bang-up year," said Brian Farrar, managing director for Innovation Advisors in Chicago, an investment banking services firm. "There been a lot of activity and valuations are strong."

Based on his company's count, Illinois has seen 275 M&A deals through the end of the third quarter. At that pace, the state is likely to surpass the 319 transactions for all of 2005, which was the highest since 2000.

"There's nothing in the market I can see right now that would make it stop," Mr. Farrar said. "It looks to me like we will do 360 to 370 deals."

Nearly two-thirds of the 200 companies surveyed by law firm Dykema Gossett PLLC said they expect to be involved in an acquisition in the next year. Nearly half of the respondents attributed continued M&A activity to the strength of the private-equity sector.

"I see it as a year of great opportunity from the private-equity side," said Janet Stiven, a partner in Chicago at Dykema, which works on M&A deals. "There are a lot of companies that used to be focused on organic growth who now see M&A (as a way to grow)."

Illinois isn't alone in its fortunes, M&A deals worldwide are also on the upswing. Innovation Advisors is predicting just shy of 4,000 global M&A deals for this year.

With the stock market back in record territory for the first time after the technology bust of the late 1990s, those involved in M&A activity said financers are looking for ways to put their money to work.

"There is a tremendous amount of capital available to fund acquisitions from public, private, hedge funds and debt," said Allan Allweiss, executive vice-president at CIT Group in Chicago, a commercial finance company. "With pension funds and endowments looking for places to park their money, private equity is getting its share of the money."

While M&A watchers can easily spot that 2006 will be a good year, it is more difficult to pinpoint which industries will see the most activity. Companies participating in Dykema's survey ranked automotive, technology and biosciences as areas to see the most transactions, while advisers picked energy, technology and automotive. Regardless of the industry, M&A players are certain the trend will continue.

"It's been a good year," Ms. Stiven said. "It certainly can be sustained into next year."